8 - Favoring the Choice of Insolvency Forum

Summary

This chapter argues that emerging economies – and more generally any jurisdiction – should facilitate the choice of insolvency forum. Consistently with a pioneering proposal suggested by Professor Rasmussen, it is argued that this choice of insolvency forum should be facilitated ex ante. Thus, in addition to providing a more desirable solution for debtors and creditors in the event of financial distress, the ex ante choice of insolvency forum would serve as a mechanism to facilitate firm’s access to finance and the promotion of economic growth. Alternatively, if the insolvency forum cannot be chosen ex ante, at least it should be facilitated ex post. Regardless of the solution eventually adopted, this chapter explains that this greater level of freedom for the choice of insolvency forum requires certain changes to the rules governing cross-border insolvency and particularly those established in the UNCITRAL Model Law on Cross-Border Insolvency. Moreover, it requires the adoption of certain rules to prevent debtors from opportunistically choosing or shifting the insolvency forum at the expense of the creditors.